20 July 2018

Zimbabwe: Agribank Secures $30m Line of Credit

Agribank has obtained a $30 million line of credit from the Industrial Development Corporation of South Africa (IDCSA) to support the agriculture sector.

The facility is favourably priced at Libor +8,9 percent.

The IDCSA board's investment committee met on Wednesday and approved the facility, which is expected to play a pivotal role in turning around the country's agriculture sector.

Agribank chief executive officer Mr Sam Malaba told The Herald Business that they were glad to get the support.

"The bank has secured an IDCSA line of credit to the tune of $30 million for support to the agriculture sector. The bank is most grateful for the support from IDCSA, which should assist recovery in the agricultural sector," said Mr Malaba.

Potential beneficiaries of the facility include fertiliser and chemical companies; livestock and dairy producers; soya and oil seed producers; pharmaceuticals; and water treatment chemicals, among others.

IDCSA has always supported Agribank since 2011 when it disbursed another $30 million facility.

In 2012, IDCSA also provided a $30 million, to support the economy which was coming out of hyperinflation.

Mr Malaba said the latest support from IDCSA will help provide the "much needed foreign exchange" in support of the productive sectors, as economic recovery gathers momentum.

The IDCSA line of credit comes at a time when Agribank, in conjunction with FBC Bank, is in the market to raise $40 million through Agro bills.

The funds are aimed at supporting the agriculture sector in the 2018/19 cropping season.

All regulatory approvals to allow the two banks to raise $40 million through Agro bills have been granted.

Since 2013, Agribank and FBC Bank have jointly raised a cumulative total of $65 million.

Over the years, the Agro bills have been oversubscribed and the two banks have consistently paid on maturity.

Mr Malaba said Agribank and FBC Bank have deliberately agreed to expand their agricultural interventions in support of Government's efforts to expand agricultural production and productivity by doubling the Agro bills funding to $40 million.

The conditions for the $40 million Agro bills are; prescribed asset status, liquid asset status, Government guarantee, tax exemption status, financial guarantee by Agribank and FBC confirming that they will settle the bills on maturity, and negotiated interest rate.

Agribank is expanding its support to the agricultural sector targeting $105 million agricultural financing inclusive of both on-balance sheet and off-balance sheet financing.

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